Shipping Ministry seeks Govt nod for Maritime fund

NEW DELHI: The Ministry of Shipping has sought the Government’s approval for setting up a maritime development fund that will meet the financing needs of the entire maritime sector, including shipbuilding.

According to sources, this is part of the long-term solutions suggested by the Shipping Ministry to support and promote the domestic shipbuilding industry.

The Ministry is also of the view that shipyards should be allowed to access external commercial borrowing by the Reserve Bank of India for working capital under the automatic route.

The Ministry has also suggested that the Government or public sector undertakings, which are ordering ships for commercial use, should offer the right of first refusal policy to Indian companies so that they can match the lowest price offered by a foreign company.

Also to make financing easier, foreign currency pre-shipment credit should be extended beyond the current stipulation of 30 days.

The shipbuilding policy, approved by the Cabinet last year, grants the right of first refusal to Indian shipyards on Government purchases and ship repairs whereby local shipbuilders can take up State-funded contracts by matching the lowest price offered by overseas entities in a public auction.

The shipyard should have a positive net worth during the immediate preceding financial year. In case an Indian shipyard does not have a positive net worth as required during the immediate preceding financial year, it should provide a comfort letter from scheduled banks indicating to provide necessary financial support (at least 60 per cent of the value of the contract for shipbuilding and 50 per cent of the value of the contract for ship repairs) to execute the project.

This is part of the guidelines to implement the financial assistance scheme cleared by the Cabinet last year.

The financial assistance to shipbuilders — both State-owned and private — will be valid for a 10-year period beginning April 1, 2016, scaling down the quantum by three percentage points every three years till 2025 when the financial assistance scheme ends.

Afterwards, only Indian-built vessels shall be procured by such departments and agencies for Governmental purposes or for own purposes. Such departments and agencies have to undertake bulk tendering for their entire vessel-related requirements with deliveries starting from 2017-2018.